Lipton Industries, Inc. v. Ralston Purina Co.

• Decision Date: 18 February 1982
• Docket Number: Appeal No. 81-565.
• Citation: 670 F.2d 1024
• Parties: LIPTON INDUSTRIES, INC., assignee, by assignment and change of name from Usen Products Company, Appellant, v. RALSTON PURINA COMPANY, Appellee.
• Court: U.S. Court of Customs and Patent Appeals (CCPA)

670 F.2d 1024

LIPTON INDUSTRIES, INC., assignee, by assignment and change of name from Usen Products Company, Appellant, v. RALSTON PURINA COMPANY, Appellee.

Appeal No. 81-565.

United States Court of Customs and Patent Appeals.

February 18, 1982.

Francis W. Guay, Washington, D. C., for appellant.

Alpheus E. Forsman and Annette P. Heller, St. Louis, Mo., for appellee.

Before MARKEY, Chief Judge, and RICH, BALDWIN, MILLER and NIES, Judges.

NIES, Judge.

This is an appeal from the decision of the United States Patent and Trademark Office (PTO) Trademark Trial and Appeal Board (board)¹ granting the petition to cancel appellant's registration² of the mark FANCY FIXIN'S for cat food on the ground of abandonment due to nonuse. We affirm.

Background

Since one of the principal issues in this case is what facts were established, we will develop them in the course of the opinion. Suffice to say at this time that appellant seeks to uphold a registration, which has been on the register since 1969, on the basis of two shipments of FANCY FIXIN'S cat food. Appellee, who admittedly made only a single shipment of FANCY FIXINS cat food to support an application for registration, seeks to remove appellant's registration as an obstacle to the registration it seeks and relies on the statutory presumption of abandonment raised after nonuse of a registered mark for two consecutive years.³

The Board's Opinion

The board held that in order to possess standing or a real interest in seeking to challenge a registration on the ground of abandonment, it is incumbent upon a petitioner to establish use of the same or similar mark for the same or similar goods as the mark and goods of the registrant so that the registration is in derogation of the petitioner's right to use its mark in commerce. The board then made extended findings based on appellant's admissions and appellee's answers to appellant's interrogatories which, in the board's view, established that appellee had used the mark as alleged; that such use was bona fide; that appellee's asserted investigation revealed that the registered mark was not in use; that appellee filed an application which was refused because of appellant's registration; that contemporaneous marketing by the parties would unquestionably cause purchaser confusion; and that pending the determination of this proceeding, appellee's action in not continuing to exploit the mark was justified.

Concerning the issue of abandonment, the board invoked the presumption of abandonment arising from two years' nonuse of a mark provided in section 45 of the Lanham Act (15 U.S.C. § 1127).⁴ Since no explanation was given which would justify appellant's nonuse, the mark was found to have been abandoned. One member dissented on the ground that the findings and conclusions drawn by the majority concerning appellee's standing were unjustified.

OPINION

For a petitioner to prevail in a cancellation proceeding, it is incumbent upon that party to show (1) that it possesses standing to challenge the continued presence on the register of the subject registration and (2) that there is a valid ground why the registrant is not entitled under law to maintain the registration.⁵

There is no dispute between the parties that the above requirements must be met by appellee. The disagreement arises over what constitutes standing and whether appellee has sustained its burden of proof.

The Position of the Parties

Appellee's principal argument is that the issue of standing is to be determined on the basis of the well-pleaded allegations of its petition. Since these allegations are sufficient, and in any event the record supports the specific findings of fact by the board concerning its interest in the mark FANCY FIXINS, appellee maintains that it is entitled to be heard on the issue of abandonment, which was established by appellant's admitted nonuse of the mark for a period of more than two years immediately prior to the date of the filing of appellee's petition.

Appellant, on the other hand, argues that the allegations in a petition cannot in themselves establish standing, that appellee must prove credible interest and credible damage to itself from the subject registration which it failed to do, and that because appellee lacks standing, the board improperly shifted the burden to appellant to excuse its nonuse of the registered mark.

Standing of Appellee/Petitioner

Section 14 of the Lanham Act (15 U.S.C. § 1064) sets forth the requirements with respect to the standing of a petitioner seeking to cancel a registration of a mark on the ground of abandonment. This section of the statute provides:

A verified petition to cancel a registration of a mark, stating the grounds relied upon, may ... be filed by any person who believes he is or will be damaged by the registration of a mark on the principal register established by this Act....

* * * * * *

(c) at any time if the registered mark ... has been abandoned, ....

It had, for many years, been the view of the board that the determinative issue under section 14 was whether the petitioner would be "damaged" by the registration. While the petitioner was not required to prove actual damage, it was incumbent upon the petitioner to prove that the registered mark was likely to cause confusion with a mark in which petitioner had superior rights or that the registered mark was a descriptive term which petitioner was entitled to use.⁶ If the petitioner was unable to establish such "damage," the petition for cancellation would be dismissed even in instances where there was uncontroverted evidence of abandonment of the mark or other grounds showing that the subject registration should be cancelled. Moreover, the board repeatedly held that a petitioner or opposer who did not prove "damage" could not be heard on what it termed "ex parte" issues affecting the validity of an application or registration.⁷

In a number of cases, this court criticized the practice of the board in not deciding all issues within the inter partes proceeding.⁸ Nevertheless, the practice of the board continued until its decision in Norac Co. v. Occidental Petroleum Corp., 197 USPQ 306 (TTAB 1977).

In Norac, a petitioner sought to cancel a number of registrations on the ground of prior rights in a mark with which the registrant's marks were alleged to be in conflict. In addition, some of the registrations were also challenged on the ground of abandonment because of nonuse of the marks. The board ruled that there was no likelihood of confusion between the respective uses. Under prior practice, the petition would have been dismissed without reaching the issue of abandonment. However, the board rejected its previous practice and ordered cancellation of the registrations covering abandoned marks. In so doing, the board stated:

This past practice of the Board permitted invalid registrations to remain on the Register only because petitioner failed to prove its standing, as distinct from alleging such standing.

The modern theory of standing, as we review the legal decisions, is that it is determined from a reading of the allegations made in good faith in the pleading. The purpose of requiring allegations that demonstrate standing is to preclude meddlesome parties from instituting proceedings as self-appointed guardians of the purity of the Register. However, a party who demonstrates a real interest in the proceeding has standing to litigate even though ultimately its allegation that he is or will be damaged is refuted. See: Federated Foods, Inc. v. Fort Howard Paper Company, 192 USPQ 24 (CCPA, 1976); and Yoder Brothers, Inc. v. California-Florida Plant Corporation, 193 USPQ 264 (CA 5, 1976).

Although fully recognizing the change from our past practice, we nevertheless, conclude that the question of standing is to be determined upon the well-pleaded allegations of the complaint, made in good faith, and is not contingent upon re-examination based on the evidentiary record, unless such record establishes clearly and convincingly that the allegation was a sham pleading.

Thus, where a party in good faith has pleaded several causes of action, as petitioner has in the present case before us, it is our firm belief that petitioner is entitled to be heard on all causes of action set forth in its pleading, even if it is not successful in one or more of such actions. See: Fort Howard Paper Company v. Kimberley-Clark Corporation, 157 USPQ 55 (CCPA, 1971); and The Community of Roquefort v. Santo, 170 USPQ 205 (CCPA, 1971).

197 USPQ at 320 (emphasis added).

In seeking to rectify its previous error, the board went further in its Norac decision than necessary in that case and further than warranted as a matter of law. While the board now looks at a party's pleading rather than proof, it continues to equate the facts which give rise to standing with all of the facts of a separate cause of action. However, standing is a threshold inquiry directed solely to establishing interest of the party. Thus, this court held that a petitioner who asserted only one cause of action for cancellation, namely, likelihood of confusion with its subsidiary's prior mark, had standing even though it lost on the merits. Universal Oil Products Co. v. Rexall Drug & Chemical Co., 59 CCPA 1120, 463 F.2d 1122, 174 USPQ 458 (1972). Drawing a distinction between the facts creating standing and the additional facts necessary to the cause of action, we reject the premise that a petitioner should be found to have standing by virtue of its complaint alone.

Allegations Alone Do Not Establish Standing

To support its argument that allegations in the petition alone establish standing, appellee relies on Norac and a line of cases in which the board restated this position.⁹ Appellant asserts that the board's theory is unsound and that the result of following it would transpose the responsibilities in litigation which require that a plaintiff prove a prima facie case before a defendant...